Mortgage industry insights from HMDA data

by CDW Financial Services|Nov 14, 2016

What does the future hold for the mortgage industry and home mortgages? Without a crystal ball, it’s hard to know for sure, but recent HMDA data sheds some light on the latest developments in the mortgage industry. This week’s FIN News focuses on the Housing Wire article, “Here are 5 big insights from the new HMDA data,” and shares the details.

The Federal Financial Institutions Examination Council released the Home Mortgage Disclosure Act (HMDA) data for 2015 at the end of September.

  • HMDA data offers the most comprehensive report on mortgage originations.
  • For 2015, 6,900 institutions reported 14.3 million loan records.
  • Despite the 9-month lag time, HMDA is an important data source.

Here are five key takeaways from the new HMDA data set:

  1. Mortgage originations benefited from a stronger housing market in 2015. 
  • Home sales, including both new and existing homes, grew by approximately 7% to 5.76 million.
  • The housing supply tightened in many markets across the country, driving home prices higher.
  • The percentage of owner-occupiers in purchase originations grew from 89% to 89.4%, reaching its highest level since 2009 and 2010.
  1. Purchase origination growth was uneven at the state level.
  • Single-family purchase originations grew in all states during 2015.
  • Growth was centered in the Western and Southeastern parts of the country.
  • Energy-producing states saw a general slowdown in purchase origination growth.
  1. There was stronger momentum in the multi-family market.
  • The strong growth in the multi-family housing market has been an important feature of the recovery.
  • Multi-family housing did not experience the same magnitude of overbuilding leading up to the housing crisis, and has benefited from the shift toward renting.
  • Multi-family purchase origination volume grew 35% over 2014 levels, twice as fast as growth in the single-family segment.
  1. Lower mortgage rates boosted refinance origination volume, but its impact was not as powerful as in 2012–2013.
  • Refinance origination volume increased by 56% to $768 billion in 2015.
  • 30-year fixed mortgage rates dropped below 4% in 2015, creating a small refinance boom.
  • Refinance volume in 2015 was only around half the size of 2013 volume, but is expected to grow in 2016.
  1. Mortgage lending going into home improvement began to increase.
  • Housing starts remained low.
  • The prolonged downturn in new home construction means that available housing has become older, requiring more home improvement work.
  • Rising home prices since 2012 means there was more home equity for homeowners to tap.

Want to read more about trends impacting banks and credit unions? Our winter issue of the FinTalk Report covers the latest IT insights for the financial services industry.